The Consumer Finance Association (CFA), which represents short-term lenders, commissioned the report into how payday loan customers have been affected by stricter rules for payday lenders.
The new rules have included forcing lenders to carry out tighter affordability checks and a cap being put on the overall cost of a payday loan. The cap was introduced in 2015, to stop fees spiralling out of control.
The research, conducted by the Social Market Foundation (SMF), found the proportion of loans on which consumers were charged extra fees, such as late payment fees, on top of contractual interest, has halved, from 16 per cent in 2013 to 8 per cent in 2015.
The average loan size has increased by £11 in recent years, from £245 in 2013 to £256 in 2016.
The cost cap on loans appears to have had an impact, and someone borrowing £200 for 30 days would pay £36 less under the current average market prices than they would have done in 2013, the report found.
The research collected data from short-term lenders as well as carrying out a survey of more than 1,200 payday loan customers.
One in 16 (6 per cent) customers said they would have used an unlicensed lender who is not a family member or a friend if they had not been able to access a short-term loan.
Nigel Keohane, research director at the SMF, said: “Policy makers should be vigilant about the potential risks to those who are excluded from the market.”
The Financial Conduct Authority (FCA), which introduced the tougher rules for payday lenders, recently said it was putting high cost loans under the spotlight, including payday loans, overdrafts, door-to-door lending and logbook loans – where someone”s car may be put up as security for a loan.
StepChange Debt Charity said earlier this month that it is still seeing many people struggling with problem payday loan debts.
The tougher rules for payday lenders were introduced following an outcry from charities who reported seeing borrowers sinking into debt spirals with multiple payday loans that they could not afford to pay off.
The CFA said research found the typical customer today is likely to earn between £20,000 and £25,000, is male, aged between 25 and 39, and is in full-time employment.
Russell Hamblin-Boone, chief executive of the CFA, said: “We are witnessing a modern credit revolution, which has led to high industry standards and better outcomes for consumers.”